Law change for charitable organisations welcome
The passage of a Bill in Parliament this week to amend the Companies Act has been long overdue. The Attorney-General and Minister for Economy Aiyaz Sayed-Khaiyum says the amendment ensures that those who donate funds to charitable organisations know whether the money has actually been spent for the purpose the particular organisation holds itself out to be.
He said mischief had been identified. Some organisations are nor registering as companies limited by guarantee under the Charitable Trust Act in terms of declaring their annual accounts.
The amendment addresses this mischief and finds a solution.
There are many charitable organisations operating in Fiji, some registered as charitable trusts, others as companies limited by guarantee.
They are supposed to be non-profit entities. It’s the companies limited by guarantee that are targeted here because some have obviously breached the conditions stipulated by the Charitable Trust Act.
The purposes of setting up a charitable trust under the Act are religious, educational, literary, scientific or charitable
The charitable purpose includes the supply of the physical wants of sick, aged, destitute, poor, or helpless persons, or of the expenses of funerals of poor persons; the education (physical, mental, technical, or social) of the children of the poor or indigent; the reformation of criminals, prostitutes, or drunkards or the employment and care of discharged criminals.
There are other requirements that must be complied with before the Fiji Revenue & Customs Services can grant the trust tax exemption.
They include the: trust be a non-profit body; trust funds and assets are not available for personal use and a trust’s assets must be distributed to other charities upon winding up or closure of the trust. The law change will make all these processes transparent. It will ensure that donations to these charitable organisations are being accounted for and are benefitting the intended recipients. Charitable organisations registered under the Charitable Trust Act which fail to prepare and present an audited annual financial statement will be named and shamed by the Registar of Titles. Mr Sayed-Khaiyum says they have found that a number of these organisations are now not registering necessarily under the Charitable Trust Act but registering as companies limited by guarantee. He says therefore they are not necessarily caught by that Act in terms of declaring their annual account.
The law change will plug a loophole and act as a deterrent to those wanting to flout the system for their own selfish agenda.
It will encourage people with the financial capacity to give to charity that their donations are being administered properly and channelled to the intended beneficiaries.